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Controversial dam project in Chile's Patagonia region on hold

June 1, 2012 | 4:34
pm

SANTIAGO, Chile -- Plans to build a $3.2-billion complex of dams that would have flooded thousands of acres in the bio-diverse Patagonia region in southern Chile have been put on indefinite hold in the face of ongoing protests against the project.

The five dams of the so-called HidroAysen project would increase Chile’s electricity capacity by 15% upon completion in 2020. But it also would have flooded 12,500 acres of pristine territory that is increasingly popular as an eco-tourism destination.

Project partner Colbun, a utility company, announced Thursday that it was suspending work on an environmental impact study that is a prerequisite to starting the project, saying the government lacked a clear energy policy. The power utility that is majority partner, Enel-Endesa, also made it known that it wants to call a board of directors meeting to reconsider the project, roughly 1,000 miles south of the capital, Santiago.

The five dams would add 2,750 megawatts of power to the national power grid.

Protests have been frequent in the year since the dam was given preliminary approval. Thousands of marchers poured into the streets of Santiago in April to protest a Supreme Court decision greenlighting the project.

Critics claimed that the rationale for the project was mainly to provide cheap energy to mining companies, not to consumers. Greenpeace and the Natural Resources Defense Council, which has called the plan a “political and financial folly,” were among the groups opposed to the project.

Also opposing it is the Roman Catholic bishop of the Aysen region, Luis Infanti de la Mora, who in a pastoral letter last year said it would provide little local benefit.

But President Sebastian Pinera remains solidly behind the project, making the case that dams are necessary to reduce Chile's 96% dependence on imported oil. But his backing of HidroAysen has been a factor in his plummeting support in polls.

The government responded Friday by rejecting the notion of a suspension and insisting that it has a “clear energy policy.” Opposition group Aysen Future Foundation said in a statement that the suspension highlights the fact that the project is questionable and that support for it has diminished.